Inaction

The setting up of three working groups of chief ministers, by Prime Minister Manmohan Singh, to suggest ways to curb rising food prices, shows the seriousness of the price situation. The prime minister had last month advised the country not to panic, and claimed that the government had taken all possible measures to check the price rise. He had even rationalised the problem by attributing it to drought and rising global prices.

But that was poor consolation, and the still rising prices seem to have prodded the government to look for more proactive measures. But the working groups formed by the existing core committee of chief ministers will take time to report back to it. Committees have been formed in the past also, with little impact. Two months ago a chief ministers’ committee was constituted to reform the public distribution system (PDS). They are not substitutes for hard and effective action on the ground.

No substantive action was taken in the last few months of relentless price rise to curb speculation, hoarding, black-marketing and other illegal practices. Speculation takes the form of future trading too. In an ideal market, futures trading is a tool for price discovery and stability but in a distorted and irregular market like India’s it can be pernicious. The government has often failed to correctly assess the food production outlook and price trends in the country. The result was delayed decisions which exacerbated the situation. The dillydallying on sugar last year even led to a steep hike in international sugar prices which made imports costly. Co-ordination of actions between various ministries has also been lacking. There is always talk about strengthening the PDS and improving delivery and targeting. But the system is still creaky in most places.

The states also have to share the blame because they shift the entire responsibility to keep prices in check to the Centre. Even the core committee meeting in Delhi on Thursday was used for finger-pointing. The high level of food stocks is considered to be a cushion but its moderating effect has not been in evidence. With about 40 million tonnes in the warehouses and an expected good rabi crop to back it up, the stocks could have been used for effective market intervention. This was not done. With the committees asked to give their reports in two months, there does not seem to be any prospect of immediate relief to the common man.